Brown lauds BMW's Mini boost to industry

Thursday 14 September 2006 05.31 EDT
First published on Thursday 14 September 2006 05.31 EDT

BMW gave British manufacturing a boost yesterday by announcing that it was switching production of the engines for its new Mini from Brazil to Birmingham.

The company said it would invest £200m and create 450 new jobs to produce the next-generation Mini at its plant at Cowley, near Oxford, increasing the proportion of the car that is produced in Britain from 40% to 60%.

The launch of the new Mini was attended by Gordon Brown who said it was "a great day for Britain" that showed "the continuing vitality of the UK motor industry" and that the country could be "the home of world-class manufacturing".

BMW's newly appointed chairman, Norbert Reithofer, who succeeded Helmut Panke this month, praised Mr Brown's running of the British economy, which, he said, had "provided the stability we need, providing the right environment for us to develop our business in the UK." Mr Brown mentioned new investment by Nissan and Honda in Britain but not the recent decisions by Peugeot-Citroën and General Motors to cut back production in the UK, with the loss of hundreds of jobs.

BMW said the Mini now accounted for one in seven of all the cars it sells. In 2005, 45,000 Minis were sold in Britain, making it the model's biggest market worldwide. The carmaker now plans to increase production from 200,000 to 240,000 vehicles a year over the next two to three years and will add 450 jobs to its workforce of 6,350 people. It said three suppliers of important components had also relocated to within a hour from Oxford, creating 750 more jobs.

The engine for the new Mini, which had previously come from Brazil, will be built at BMW's plant at Hams Hall, near Birmingham, where it will invest £30m. It will also invest £100m at Oxford and £60m in Swindon. Harald Krüger, the director of the Hams Hall plant, said labour costs in Brazil were about two-thirds of what they are in Britain but made up only 15%-20% of total production costs. By moving engine production closer to the Cowley plant, he said, it would reduce transport and storage costs and improve efficiency.

By focusing production on its plants in the UK, BMW thinks it can also increase flexibility, such as allowing customers to change their engine selection up to a week before production. "We believe that production should follow the market," said Anton Heiss, managing director of the Oxford plant.